Question - Assume that you are the manager of a local fast food restaurant.
Question 1 -
a. Name five variable costs that would be present in this business. Be specific.
b. Name five fixed costs that would be present in this business.
Question 2 -
a. Volume fluctuates from day to day. When should you expect total variable costs to increase or decrease?
b. Should you expect to see a significant change in unit variable costs from one day to the next? Why?
c. Suppose that volume changes significantly from one week to the next. How would you expect total unit cost to react from one week to the next? Why?
d. Assume that when you became manager profitability at this location was marginal for this type of business. To improve profitability what areas of the business would you examine?